Corporate Governance
Computer Engineering & Consulting Ltd.

Last update: April 24, 2024

Computer Engineering & Consulting Ltd.
Takashi Himeno, President
Contact: General Affairs Division, Corporate Administration Unit, Corporate Management Group
Securities Code: 9692
Tel. +81-3-5789-2441

The following describes corporate governance at Computer Engineering & Consulting Ltd. (“Company” hereinafter):I

Basic Views on Corporate Governance, Capital Structure, Corporate Profile; Other Basic Information

1. Basic views
The Group considers thoroughgoing compliance with business ethics to be fundamental to corporate governance. Its business management isbased on the following policies established in the Corporate Code of Conduct and the Employee Action Standards.
(i) We will act in accordance with social norms, laws, regulations, and Company rules and regulations.
(ii) We will engage in fair transactions with a keen sense of fairness, transparency, and free competition at all times.
(iii) Through swift decision-making and agile actions, we will achieve more efficient management and increase earnings; earn the trust of ourshareholders, trading partners, and business partners; and seek to achieve the sustained growth and development of the Company.
As a company with an Audit and Supervisory Committee, the Company’s corporate governance structure involves oversight and audits of thebusiness activities implemented by the Board of Directors and the Audit and Supervisory Committee. We have adopted an executive officer
system to ensure swift implementation strictly based on decision-making by the Board of Directors. Under this system, authority for businessexecution is delegated to executive officers after clarifying executive responsibilities, thereby furthering efficient management. In addition, theNomination Committee and the Compensation Committee have been established as advisory bodies to the Board of Directors on the topics ofexecutive nomination and compensation. The majority of the membership of each of these committees consists of independent outside Directors.
Decisions based on the recommendations of these committees secure the transparency and fairness of the decision-making processes.

[Reasons for noncompliance with the principles of the Corporate Governance Code]Updated[Supplemental Principle 2.4.1: Ensuring Diversity, Including Active Participation of Women]
The Group promotes diversity and inclusivity in management based on a respect for individuality and personality. It fosters working environmentsthat free each individual to demonstrate his or her individuality and abilities to the fullest.
In addition to building working environments based on the rights of employees, we promote diversity through the measures listed below,
reflecting our conviction that leveraging the strengths of diverse human resources will lead to a stronger and more resilient organization.
 Promoting the role of women Workstyle reforms
 Creating comfortable working environments
 Promoting professional human resources (midcareer hiring) Enhancing HR development
 Promoting understanding of long-term care needs throughout the organization<Voluntary and measurable goals for ensuring diversity>(1) Promoting the role of women to managerial positions
We are working to achieve our goal of women filling at least 12% of managerial positions by 2030.
Shown below are the percentages of managerial positions filled by women:
FY53: 3.7%; FY54: 5.1%; FY55: 4.4%; FY56: 4.1%
The Company does not discriminate by gender for managerial appointments. However, we see a pressing need to increase numbers of
women managers to serve as role models. The proportion of women among our employees is rising as we are hiring growing numbers of
women, centered on new graduates. We will continue to examine efforts that support career development for women over the medium tolong term, with further consideration for circumstances and life events specific to women.
Reference: Proportion of all employees accounted for by women
FY53: 19.5%; FY54: 21.1%; FY55: 23.0%; FY56: 23.9% (as of January 2024)
FY57 (target for year ending January 31, 2025): 25% or more
(2) Promoting the role of foreign nationals and midcareer hires to managerial positions
The Company is promoting the appointment of core human resources in accordance with the approach to diversity described above.
Foreign nationals and midcareer hires are provided equal opportunities for promotion to managerial positions. We rule out discriminatory
practices for such appointments. Accordingly, at this time we have not formulated or disclosed targets for their appointment to managerial
positions.
<Policies for human resource development and internal environmental development to ensure diversity and status of their implementation>
The Company maintains support structures to ensure that our diverse human resources can work based on respect for different values and toenable a suitable work-life balance that accounts for life events and other circumstances.
To ensure diversity, we are also actively encouraging men to take childcare leave. The results of this endeavor are summarized below.
 Percentages of men taking childcare leave
FY52: 4.5%; FY53: 25.0%; FY54: 20.0%; FY55: 57.7%; FY56: 63.0% (as of January 31, 2024)
Through these support systems, we promote diversity while maintaining workplaces in which all employees can continue to work in comfort. We
plan to formulate policies on human resource development and internal environmental improvements in the future.
[Supplemental Principle 3.1.3: Enhancing Information Disclosure](1) Sustainability initiatives
The Company recognizes sustainability issues as key management topics. We work with a wide range of stakeholders, disclose information
actively, and strive to increase transparency. See the Company website for information on the Company’s ESG concepts and policies andrelated efforts.

 Environmental approaches
https://www.cec-ltd.co.jp/esg/environment.html
 Social contribution approaches
https://www.cec-ltd.co.jp/esg/social_contribution.html(2) Investment in human capital and intellectual property, etc.
We believe the continuing growth of individual employees makes the Company more competitive. For this reason, we implement thefollowing measures to secure and grow our human resources and maximize their performance.
<Securing and developing human resources>
We promote midcareer hires with the primary goal of securing professional human resources who possess the individuality and strength
needed to grasp the rapidly changing external environment accurately and to drive growth strategies. We are also making progress ondeveloping an organizational culture and environment in which diverse human resources can thrive, regardless of their individual attributes,
values, and other properties.
In addition, to enable the continuing growth of our employees, we are thoroughly revising our HR systems, switching to a system thatemphasizes roles and responsibilities. We are also switching to a system of management by objectives, whereby efforts on the part ofindividuals to take on challenges are reflected in their evaluations. The goal is to develop human resources who can plan and achieve theirown growth individually. We are implementing the following initiatives to create an environment in which employees can proactively plan theirown careers and in which the Company provides attentive support for their plans, thereby developing an organization in which personal
growth leads to the continuing growth of the Company:(i) Clarification of roles and reductions in number of grades
By clarifying the roles for each grade and reducing the number of grades in general posts, we have created an environment that allows
employees to build their careers rapidly and makes it easier to envision their goals and career paths.
(ii) Providing multidirectional career maps
We provide multidirectional career maps that reflect a shift from the traditional framework of general, core, and managerial (supervisory)
posts to a system including newly established specialized posts. Based on these career maps, we support individual career planning.
(iii) A new approach to HR development
From the perspective of autonomous HR development, we have revised management by adopting the use of objective sheets for
employee evaluations. The result has been a shift from objectives set by the Company to an approach in which employees submit theirown objectives and achievement goals and decisions are made by reaching consensus in interviews with superiors.
(iv) Employee-led growth and learning
The Company provides an environment in which employees can determine the levels they wish to achieve and grow by learning from theexperience of taking on challenges, even if these efforts have not led to clear-cut success.
In addition, in response to today’s increasingly diverse and complex environment, we train employees skilled in digital transformation(DX) and project management (PM) and implement a system of systematic education in accordance with the roles specific to individualtiers and skills. Through these and other measures and integrated Companywide education, we are seeking to strengthen our humanresources, support employee reskilling, and enhance the capabilities of younger employees.
(v) Health management
The Company believes its human resources represent the most important capital in driving sustained business growth. Human resources
are also key elements in achieving management targets and executing management strategies.
We believe employee health is essential to doing business and the sustainable growth of the Company will contribute to customers, ourcommunities, and society at large.
Accordingly, we consider maintaining the health of our employees, our most important capital, a key management issue. In addition tomaintaining a health management structure, we strive to prevent, promptly discover, respond appropriately to, and prevent therecurrence of any stress-related conditions. We also pursue efforts in areas such as consideration for work-life balance, appropriate
working hours, and measures to ensure that employees have time off for their personal lives. These efforts have been well regarded; in
2003, we were certified as one of Health & Productivity Management Outstanding Organizations.
(vi) Diversity and inclusivity (D&I)
The Company strives to be an organization in which employees reflecting diverse viewpoints understand and help one another andeffectively work together while exchanging various ideas. We strive to maintain an environment in which employees can work withflexibility and comfort, even when facing diverse circumstances.
During the five-year period from February 1, 2021 through January 31, 2026, the Company will strive to increase the numbers of women
employees to at least 25% of all employees. To achieve this goal, we have studied and proposed various measures involving both
intangibles, such as organizational culture and awareness, and tangibles, such as systems and rules. The goal is to establish anenvironment in which female employees can succeed and demonstrate their own abilities and experience to the fullest. Additionally, we
are actively implementing measures to support efforts to balance work with childcare and family care, including training for expectant
fathers to encourage them to take childcare leave, courses on balancing work and childcare for those taking childcare leave, andseminars on long-term care. We provide training to encourage all employees to consider D&I issues, thereby seeking to foster anenvironment in which the need for these issues is recognized and in which mutual support is the norm.
<Investments in intellectual property>
The Company invests in and holds numerous intellectual property rights, including patents, UI designs, trademarks, and copyrights tosoftware programs. We pursue research and development to generate new IP and disclose research and development expenses annually in
our securities report.
In particular, we seek to obtain patents for package products, linked to our business strategies. As part of efforts to enhance our patentportfolio and strengthen business relationships, we actively apply for patents jointly with our partners for inventions created through joint
development and similar activities.
We strive to put IP to effective use through means such as providing for reuse of software programs by the Company in contracts withcustomers.
(3) Impact of risks and opportunities related to climate change on Company business activities and earnings
We have identified as the main causes of our emissions of carbon dioxide (CO2), a greenhouse gas, the electricity consumed at data centers
and the life cycles of hardware products sold to customers. We are striving to reduce these emissions through an ISO 14001-certified
environmental management system. The Board of Directors monitors the progress of these efforts and related matters. The scope ofCompany facilities subject to ISO 14001 certification is growing steadily; we plan to achieve certification for all facilities in Japan during FY57.
In our Medium-term Management Plan, we indicate that we plan proactive efforts to address social issues through our businesses. These
initiatives currently underway are also described on the Company website.
https://www.cec-ltd.co.jp/esg/social_business.html[Supplemental Principle 4.2.2: Roles and Responsibilities of the Board of Directors (2)](1) Company sustainability initiatives
We recognize issues related to sustainability as priority management issues. During the 56th fiscal year, the Company Board of Directors
repeatedly discussed matters centered on the business portfolio, with sustained business growth framed as the top priority. The 57th fiscal
year marks the final fiscal year of the Medium-term Management Plan (for the fiscal year ended January 31, 2023 through that ending
January 31, 2025). In addition to discussion on the next Medium-term Management Plan, the Board will continue deliberations intended togive concrete form to measures necessary over the medium to long term and to earn the understanding and sympathy of all stakeholders,through means including revising our corporate purpose (management philosophy) to a longer range perspective; identifying the businessportfolio and priorities to target; and capital policies reflecting our investment strategies. We plan to consider formulating basic policies forsustainability initiatives and to disclose them once they are formulated.
See the Company website concerning the Company’s basic efforts to address sustainability topics.
(2) Effective oversight of sustainability initiatives
In accordance with the management policies described under Principle 3.1 (i), the Board of Directors engages in ongoing deliberations toensure that our strategies on the allocation of management resources and the business portfolio prove effective.

[Disclosure based on the principles of the Corporate Governance Code]Updated[Principle 1.4: Policy on Cross-shareholdings]
Company policy calls for cross-shareholdings for purposes such as strengthening transaction relationships with the companies invested inthrough such shareholdings only when they will contribute to increasing corporate value over the medium to long term. The Board of Directors
reviews cross-shareholdings annually to confirm the reasons for such holdings and to determine whether the benefits and risks associated withthem are appropriate in light of capital costs. We strive to reduce cross-shareholdings by selling those shares that this review has shown no needto maintain. We make decisions on exercise of voting rights in cross-shareholdings based on a comprehensive consideration of corporate value,
including the presence or absence of serious concerns such as scandals, while verifying the economic rationality of the company in question forthe medium to long term.
[Principle 1.7: Transactions with Interested Parties]
Company in-house rules require the approval of the Board of Directors for transactions with officers (including those involving conflicts ofinterest). We have also established necessary approval procedures for transactions between the Company and major shareholders and similar
parties, in accordance with the importance and nature of such transactions. Such transactions are executed under conditions similar to those forordinary transactions.
[Supplemental Principle 2.4.1: Ensuring Diversity, Including Active Participation of Women]
Described under I-1. Reasons for noncompliance with the principles of the Corporate Governance Code in this Report.
[Principle 2.6: Roles of Corporate Pension Funds as Asset Owners]
The Group has adopted a contractual defined-benefit corporate pension plan. The management of pension assets is entrusted to an external
asset manager and conducted to ensure that pension benefits can be paid to employees into the future in accordance with policy asset ratios
formulated from a medium- to long-term perspective.
The state of pension asset management is monitored quarterly to revise asset ratios as necessary. We assign qualified personnel such asaccounting and human resources section heads to verify the asset management by the external asset manager and make proposals regarding
future asset management. We strive to prevent an excessive concentration of authority in individual personnel and to develop related humanresources through reviews and transfers of personnel in charge every five years.
[Principle 3.1: Enhanced Information Disclosure](i) In addition to carrying out appropriate disclosure pursuant to laws and regulations, the Company proactively communicates information andholds semiannual briefings on financial results to ensure the transparency and fairness of Company decision-making and to achieve effective
corporate governance.
(Management philosophy)
Based on the goal of contributing to customer business development through high-quality ICT, the Company has established a code of
conduct under which it strives to cooperate appropriately with stakeholders. See the corporate philosophy disclosed on the Company website
for more information.
Corporate philosophy: http://www.cec-ltd.co.jp/corporate/policy.html(Management strategies, management plans)
Based on the vision of the Medium-term Management Plan, which calls for becoming a company that creates the future with ICT, Company
officers and employees make steady day to day progress on addressing issues to which we must respond. For more information, see theMedium-term Management Plan on the Company website.
Medium-term Management Plan: http://www.cec-ltd.co.jp/ir/aboutus/manegement_plan.html(ii) As described under 1. Basic views and on the Company website.
https://www.cec-ltd.co.jp/esg/governance.html(iii) Director compensation consists of fixed (monetary) compensation, performance-linked (monetary) compensation, and performance-linked
stock options. Decisions are made based on advice from the Compensation Committee, a voluntary advisory body.
The policies on compensation decisions for individual Directors are described below.
[Policy for decisions on the individual compensation of Directors who are not Audit and Supervisory Committee Member]
The Company has established policies for decisions regarding the calculation of compensation, etc. for Directors who are not Audit andSupervisory Committee Members. These are outlined below.
a. The Board of Directors makes decisions on Director compensation (hereinafter excluding Directors who are Audit and Supervisory
Committee Members) based on deliberations and recommendations by the Compensation Committee to ensure the fairness andtransparency of decision-making. Director compensation is intended to encourage Directors to contribute to the achievement ofCompany targets and improve corporate and shareholder value.
b. Director compensation consists of fixed compensation, performance-linked compensation, and stock option share-based compensation.
i. Fixed compensation
This is paid in fixed monthly amounts during the term of office, based on the standard amount specified for each post.
ii. Performance-linked compensation
Performance-linked compensation is paid at 100% of base amounts for achievement of the target specified at the start of the year.
Performance-linked compensation consists of compensation linked to Company performance and compensation linked to individual
performance. Performance-linked compensation is paid once annually as a bonus.
(a) Compensation linked to Company performance is calculated by multiplying the standard amount specified for each post by acoefficient corresponding to the degree to which planned consolidated financial targets are met (net sales and operating income).
(b) Compensation linked to individual performance is calculated by multiplying the standard amount specified for each post by acoefficient based on achievement of planned financial results (net sales and operating income) in each section of which therecipient is in charge.
The main indicators used for performance-linked compensation are net sales and operating income achieved. Final decisions on
actual amounts paid are made by the President, based on an overall consideration of various aspects, including progress on
medium-term plans and the recommendations of the Compensation Committee. These decisions are made through a process that
includes deliberations and recommendations by the Compensation Committee, based on amounts calculated using coefficients
corresponding to achievement rates vs. planned figures.
iii. Stock option share-based compensation
Stock option share-based compensation has been adopted to replace officer retirement benefits. Stock options are issued so that
Company Directors can share with shareholders the benefits and risks of fluctuations in share price and to clarify management
responsibility for increasing corporate value. The number of stock options issued reflects fixed and performance-linked compensation
for individual Directors within the range authorized by the General Meeting of Shareholders, based on monthly amounts of individual
fixed and performance-linked compensation. Stock options are issued while the recipients are employed and may be exercised only
after they retire.
c. Ratios of individual compensation types to Directors’ personal compensation
Target ratios of individual compensation types are shown below.
When 100% performance-linked compensation is paid, the ratios of fixed compensation (monetary and stock option compensation) andperformance-linked compensation (monetary and stock option share-based compensation) are 67% and 33%, respectively.
(When performance-linked compensation and stock option share-based compensation are paid in specified amounts)
Directors: 61.8–92.3% fixed/monetary, 5.2–7.7% fixed/stock options, 0–30.5% performance-linked/monetary, 0–2.5% performancelinked/stock options
Outside Directors: 100% fixed/monetary

d. Outside Directors are paid a fixed salary only. They are not eligible for performance-linked compensation (for both company andindividual performance) or stock option share-based compensation.
e. Decisions on some aspects of Directors’ compensation, etc. are delegated by the Company to the President. This authority anddelegation concerns individual amounts of performance-linked compensation paid to each Director. Decisions are made on these mattersbased on recommendations by the Compensation Committee.
[Matters related to the delegation of decision-making on compensation, etc. for individual Directors]
The Company entrusts certain decisions on the details of compensation, etc. for Directors to the President. This authority and delegation
concerns individual amounts of performance-linked compensation paid to each Director. Decisions are made on these matters based onrecommendations by the Compensation Committee.
This authority is delegated because the President is responsible for evaluating businesses of which individual Directors are in charge fromthe perspective of a bird’s-eye view of the Company as a whole. It is deemed appropriate that such an individual make decisions on
performance-linked compensation for individual Directors.
The Board of Directors considers the specific compensation figures, etc. paid to each Director in the fiscal year under review were
determined in accordance with decision policies as they were determined by the Representative Director from the perspective of theCompany’s overall businesses, based on policies and within the range approved by the General Meeting of Shareholders.
(iv) The Company has established the Nomination Committee as an advisory body to the Board of Directors. The Nomination Committee
deliberates on the nominations of Directors and other members of the management team, while the Board of Directors makes decisions onsuch candidates based on the recommendations of the Nomination Committee. To ensure its independence, the Nomination Committee ischaired by an Independent Outside Director, a majority of whose membership consists of Outside Directors. In addition to providing opinions
to the Board on candidates for Director and other posts through insights based on the Outside Directors’ wealth of experience, theCommittee formulates and monitors succession plans and advises the Board to ensure the objectivity and transparency of procedures
related to the nominations of Directors, the core management team, and other members of management.
Based on the consent of the Audit and Supervisory Committee, the Nomination Committee submits a list of candidate Audit and Supervisory
Committee members to the Board of Directors for selection from a pool of eligible persons who provide a wealth of financial and accounting
knowledge and experience and who have the qualities needed to adequately oversee the Company Board of Directors.
(v) Individual career summaries of candidate Directors and reasons for their selection as candidates are provided in the Notice of the General
Meeting of Shareholders.
https://www.cec-ltd.co.jp/ir/shareholder_meeting.html[Supplementary Principle 3.1.3: Enhanced Disclosure]Described under I-1. Reasons for noncompliance with the principles of the Corporate Governance Code in this Report.
[Supplementary Principle 4.1.1: Overview of the Scope of Delegation to Management]
The Board of Directors makes decisions on important matters in full compliance with laws, regulations, the Articles of Incorporation, and theBoard of Directors Regulations. The scope of business execution by management and related authority are clearly set forth in in-house
regulations.
[Principle 4.9: Independence Standards and Qualification for Independent Directors]
Independent outside Directors are appointed in accordance with the requirements of the Companies Act and independence criteria set by
securities exchanges.
Independent outside Directors are expected to serve in advisory and oversight roles related to Company management. They are appointed
based on a comprehensive consideration of personal qualities, expertise, and experience for these roles.
[Supplementary Principle 4.10.1: Use of Optional Approach]
The Company has established the Nomination Committee and the Compensation Committee as advisory bodies to the Board of Directors. These
committees deliberate on various matters, including nominations, performance evaluations, and compensation design for Directors and othermembers of management, then submit their views to the Board of Directors. They also formulate and monitor succession plans. Theirmembership consists of a majority of Independent Outside Directors. Each committee is chaired by an Independent Outside Director to ensure
the independence and transparency of committee involvement and advising. The details are described in the supplemental explanation to II-1.
Voluntary Committees in this Report.
Policies on the nomination of officer candidates are described under 3.1 (iv). Policies on determining compensation for individual Directors aredescribed under 3.1 (iii) of this Report.
[Supplemental Principle 4.11.1: Views on the Balance, Diversity, and Size of the Board of Directors in Light of its Overall Knowledge, Experience,and Abilities]
The Board of Directors consists of seven internal Directors with deep expertise concerning the Company’s business fields and five Independent
Outside Directors (including two women) who provide experience in management with other companies, experience in the areas of humanresources, finance, accounting, the law, and compliance, and CPA qualifications. The structure of the Board is diverse in terms of knowledge,
experience, abilities, and gender.
At this time, there are 12 Directors. We consider this an appropriate number, given the Board’s responsibility to engage in constructive discussion
and to exchange opinions.
Skill matrices are provided in the reference materials to this Report and in the Notice of the General Meeting of Shareholders.
(URL: https://www.cec-ltd.co.jp/ir/shareholder_meeting.html)
Policies and procedures related to appointment of Directors are described in this Report under 3.1. (iv).
[Supplemental Principle 4.11.2: Concurrent Positions of Directors and Corporate Auditors]
Attendance of Directors (including Outside Directors and Directors who are Audit and Supervisory Committee Members) in meetings of the Boardof Directors and the Audit and Supervisory Committee is high. The number of concurrent positions is considered reasonable.
The concurrent positions of Directors as officers of other listed companies are disclosed in the Notice of the Ordinary General Meeting of
Shareholders and the securities report.
[Supplemental Principle 4.11.3: Analysis and Evaluation of the Efficacy of the Board of Directors as a Whole]
To increase corporate value by enhancing the functions of the Board of Directors, through an independent outside agency, the Company surveys
all Directors (including Directors who are Audit and Supervisory Committee Members and Outside Directors) once annually in connection with
the Board’s efficacy. The results of this survey and any issues identified are discussed by the Board of Directors. Measures to address related
issues are also discussed and implemented.
This year, these discussions repeatedly considered in particular the definitions of roles of the Board, which makes decisions on Companywide
policies, and the roles of the Executive Committee in charge of business execution.
New issues identified in the survey are as follows:[Issues this year] Structure of the Board of Directors (segregation of management and execution functions) Subjects of deliberation by the Board of Directors
Deliberations on congruence between management strategies and plans and the Company’s sustained growth and efforts to create
corporate value
Sufficient deliberation on updates and revisions to management strategies and plans in response to changing external conditions
 Board of Directors monitoring functions
Appropriate oversight of management strategies and plans from the perspectives of Groupwide potential risks and potential response Support structures for Directors (including Audit and Supervisory Committee Members)
 Operation of the Nomination Committee and the Compensation Committee

Based on the issues objectively identified in survey results, the Board of Directors selects priorities and implements continuous improvements forenhanced efficacy of the Board, as well as deliberating on measures to increase corporate value.
[Supplemental Principle 4.14.2: Director and Audit and Supervisory Committee Member Training Policy]
Company activities intended to ensure that Directors (including Directors who are Audit and Supervisory Committee Members) fulfill their due
individual roles and responsibilities include internal training, external seminars, and study sessions.
Under Company rules, the Company assumes the costs of such seminars and training. Information is provided on key legal amendments andsimilar matters where appropriate.
[Principle 5.1: Policy for Constructive Dialogue with Shareholders]
The Corporate Planning Division is the Company’s section responsible for IR. The Company has adopted a structure under which the sections of
the Corporate Management Group assist the Corporate Planning Division under the leadership of the Director responsible for IR.
In addition to semiannual briefings on financial results for institutional investors, analysts, and others, we organize individual interviews and small
meetings. As necessary, questions and comments received from investors in financial results briefings, individual interviews, and small meetings
are shared with the management team by reports presented at meetings and the distribution of these reports as necessary. Appropriate
responses are determined on this basis. Documents concerning financial results and materials for financial results briefings are published on our
website:
URL: http://www.cec-ltd.co.jp/ir/
Financial results briefings are streamed live and made available on demand to ensure a wider stakeholder audience can better understand theCompany.
(Status of shareholder dialogue, etc.)
We implement shareholder dialogue as follows:(1) Main persons responsible for dialogue
IR section staff and Director responsible for IR(2) Overview of shareholders involved in dialogue[Period covered: February 1, 2023 – January 31, 2024]
 Dialogues: 129 (including one-on-one dialogue and telephone interviews)
 Method: centered on active investors
 Areas of responsibility of participants: analysts, fund managers, ESG managers, etc.
(3) Main themes of dialogue and matters of interest to shareholders
 Rate of growth in orders received compared to competitors and other summaries and forecasts of business results
 Progress and projected levels of HR measures involving hiring targets and wage trends
 Financial matters such as capital costs, capital policies, and status of considerations of M&A activities(4) Status of feedback to management and the Board of Directors regarding shareholder views and concerns identified through dialogue
 Disclosure on cash allocation and policies on financial measures
 Enhanced disclosures for orders received and other disclosure topics
 Investors’ views on the management indicators for the next Medium-term Management Plan
(5) Details of measures taken (if any) in response to dialogue and subsequent feedback Disclosure of cash allocation policies in formulating the VISION 2030 long-term vision
 Expansion of quantitative information on management indicators, performance indicators, etc.
(Measures to realize management conscious of capital costs and share prices) (Now under consideration) (English version available)[Principle 5.2: Establishing and Disclosing Business Strategies and Business Plans]
To clarify its basic policies on revenue plans and capital policies, the Company discloses its approach to cash allocations in the Medium-termManagement Plan for FY2022–2024. It uses net sales, ordinary income, ordinary profit margin, and return on equity (ROE) as key performanceindicators (KPIs) for profitability, capital efficiency, etc.
With regard to matters such as reviews of the business portfolio and allocation of management resources, including allocations of capital
investments, research and development investments, and human capital, we strive to explain specifically what we plan to do in terms that areeasily understandable for shareholders.
We provide timely disclosure on the progress of plans through means such as supplemental materials for briefings on financial results andbusiness reports.
 Medium-term Management Plan: http://www.cec-ltd.co.jp/ir/aboutus/manegement_plan.html
 Financial Results Briefing materials: https://www.cec-ltd.co.jp/ir/guide/ Business report: https://www.cec-ltd.co.jp/ir/report/
The Company is currently making progress on formulating the next Medium-term Management Plan and the VISION 2030 long-term vision forthe period through FY2030. We plan to disclose information on measures to achieve a form of management sensitive to capital costs and shareprices and the validity of management indicators along with announcements of these medium- and long-term plans following repeated discussion
by the Board of Directors and other officers.

2. Capital structure
Foreign shareholding ratio

20% or more but less than 30%

Updated[Status of major shareholders]

Updated

Name

Number of shares held

Percentage (%)

Mitsuiwa Corporation

4,447,200

13.22

The Master Trust Bank of Japan, Ltd. (trust account)

3,987,700

11.86

Custody Bank of Japan, Ltd. (trust account)

2,734,400

8.13

Hirosato Iwasaki

1,335,100

3.97

BNP PARIBAS LUXEMBOURG/2S/JASDEC/FIM/LUXEMBOURG FUNDS/UCITS ASSETS

1,275,000

3.79

Fujitsu Limited

1,240,000

3.68

CEC Employee Stock Ownership Program

1,188,700

3.53

Japan Foresight Electronics Ltd.

930,960

2.76

MSIP CLIENT SECURITIES

594,200

1.76

STATE STREET BANK AND TRUST COMPANY 505227

575,400

1.71

Controlling shareholder (excluding parent company)–––––

Parent company

N/A

Supplementary explanation–––––

3. Corporate attributes
Listed stock market and market section

Tokyo Stock Exchange, Prime Market

Fiscal year-end

JanuaryType of businessInformation and telecommunications

Number of employees (consolidated) as of the end of theprevious fiscal year

1,000 or more

Sales (consolidated) in previous fiscal year

¥10 billion or more but less than ¥100 million

Number of consolidated subsidiaries as of the end of theprevious fiscal year

Less than 10

4. Policy on measures to protect minority shareholders in transactions with controlling shareholder–––––

5. Other special circumstances that may have a material impact on corporate governance–––––

II Business Management Organization and Other Corporate Governance Systems Affecting Decisionmaking, Business Execution, and Management Oversight
1. Organizational composition and management
Organization form

Company with an Audit and Supervisory Committee[Directors]
Maximum number of directors stipulated in articles ofincorporation

15

Term of office stipulated in articles of incorporation

1 yearChairperson of the Board

President

Number of Directors

12

Appointment of Outside Directors

Appointed

Number of Outside Directors

5

Number of Outside Directors designated as Independent
Directors

5

Relationship to the Company (1)Updated

Name

Attribute

Masahiko Ootsuka

From another company

Shizuyo Takahashi

From another company

Noriko Kosugi

From another company

Katsunori Taniguchi

Certified public accountant

Motoaki Kuniyasu

From another company

Relationship to the Company*
a

b

c

d

e

f

g

h

i

j

k

* Categories for “Relationship to the Company”*  The director currently belongs or recently belonged to the category;  The director belonged to the category in the past*  A close relative of the director currently belongs or recently belonged to the category;  A close relative of the director belonged
to the category in the pasta. Executive of the Company or its subsidiaries
b. Executive or non-executive director of a parent company of the Company
c. Executive of a sister company of the Company
d. A party whose major client or supplier is the Company or an executive thereof
e. Major client or supplier of the Company or an executive thereof
f. Consultant, accountant, or legal professional who receives large monetary sums or other property from the Company beyond compensation
as director
g. Major Company shareholder (or executive of said major shareholder if the shareholder is a legal entity)
h. Executive of Company client or supplier (other than those under d, e, or f) (the individual only)
i. Executive of an organization with which the Company exchanges outside directors (the individual only)
j. Executive of an organization that receives donations from the Company (the individual only)
k. Other
Relationship to the Company (2)NameMasahiko Ootsuka

Shizuyo Takahashi

Noriko Kosugi

Updated

Audit and Supervisory Independent
Committee Member
directorSupplementary explanationof applicable item

Reasons for appointment–––––

Mr. Masahiko Ootsuka has knowledge and experience
gained serving as an officer at affiliates of a major
automaker. The Company has reappointed him as an
Outside Director based on expectations that he willcontinue to provide advice and oversee businessexecution from a broad management perspective.
The Company has no conflicts of interest with Mr.
Ootsuka and believes that his reappointment will notundermine interests of ordinary shareholders.

–––––Ms. Shizuyo Takahashi has experience gained as headof a business division and human resource division ata systems development company and as a director
and head of an administrative division at a company
listed on the First Section of the Tokyo Stock
Exchange. The Company has reappointed her as an
Outside Director based on expectations that she willcontinue to provide advice from a wide-ranging
perspective and oversee business execution from apractical point of view, particularly in addressing
Company issues related to human capital.
The Company has no conflicts of interest with Ms.
Takahashi and believes that her reappointment will notundermine interests of ordinary shareholders.

–––––Ms. Noriko Kosugi has experience gained in financeand accounting at various Japanese and foreigncompanies, as well as broad experience withmanagement planning and investor relations. The
Company has reappointed her as an Outside Director
based on expectations that she will continue tooversee business execution, provide appropriate
advice to management regarding investor relations,planning, and finance in particular, and advise theCompany from the perspectives of internationalizationand diversity.
The Company has no conflicts of interest with Ms.
Kosugi and believes that her reappointment will notundermine interests of ordinary shareholders.

Name

Katsunori Taniguchi

Motoaki Kuniyasu

Audit and Supervisory Independent
Committee Member
director









Supplementary explanationof applicable item

Reasons for appointment

Certified public accountant

Although Mr. Katsunori Taniguchi lacks experience withdirect involvement in corporate management, he has
expertise and experience as a certified public
accountant and experience as corporate auditor with asystems development company. The Company has
chosen him as a candidate for an Outside Director who
is an Audit and Supervisory Committee Member basedon expectations that he will continue to implement
appropriate audits and supervision based on such
experience.
The Company has no conflicts of interest with Mr.
Taniguchi and believes that his reappointment will notundermine interests of ordinary shareholders.

–––––Mr. Motoaki Kuniyasu has auditing experience as acorporate auditor and audit and supervisory committee
member, as well as experience with governance andcompliance operations with global enterprises. The
Company selected him as a candidate for an Outside
Director who is an Audit and Supervisory Committee
Member based on expectations that he will contributeto enhanced governance from a global perspective andimplement appropriate audits and supervision basedon such experience.
The Company has no conflicts of interest with Mr.
Kuniyasu and believes that his appointment will notundermine interests of ordinary shareholders.

[Audit and Supervisory Committee]
Membership and chairperson
Total members
Audit and Supervisory
Committee

Full-time members

Inside Directors

Outside Directors

1

1

2

3

Directors and employees assigned to assist in the duties of the
Audit and Supervisory Committee

Chairperson
Inside Director

N/A

Reasons for the adoption of the current system
The Audit and Supervisory Committee is authorized to instruct the staff of the internal audit section and other sections to assist with audit tasks
as necessary. The Company seeks consent from the Audit and Supervisory Committee regarding the transfer and evaluation of employees who
have assisted with audit tasks and other matters.
Status of joint efforts among the Audit and Supervisory Committee, accounting auditor, and internal audit section
The Company has concluded an auditing contract with PwC Japan LLP on auditing under the Companies Act and the Financial Instruments andExchange Act. The Audit and Supervisory Committee meets with PwC Japan LLP regularly before accounting audits (for each quarterly andyear-end settlement of accounts) and reports on the findings of accounting audits (for each quarterly and year-end settlement of accounts) and atother occasions. The Audit and Supervisory Committee also requests the attendance of the General Manager of the Internal Audit Division, who
is responsible for the internal audit section, in its meetings; receives reports on the status of internal audits and other activities; and receives
assistance from Internal Audit Division personnel as needed.

[Optional committees]
Optional committee established corresponding to a nominationor compensation committee

Y

Status of the establishment of optional committees, their membership, and their chairpersons

Name of committee
Optional committee
corresponding to anomination committee

Nomination
Committee

Total
members

Full-timemembers

InsideDirectors

OutsideDirectors

Outsideexperts

Others

9

0

4

5

0

0

Chairperson
OutsideDirectorOptional committee
corresponding to acompensationcommittee

Supplemental explanation

Compensation
Committee

9

0

4

5

0

0

OutsideDirector

Updated(1) Membership selection and nomination process
Members are chosen by resolution of the Company Board of Directors.
To ensure the independence of the Nomination Committee and the Compensation Committee, a majority of the membership of eachcommittee consists of independent Outside Directors. The chairpersons are chosen from among the independent Outside Director members.
Indicated below is the Committee membership as of FY2024 (FY57).
Nomination Committee: Masahiko Ootsuka (Chairperson/Outside Director), Shizuyo Takahashi (Outside Director), Noriko Kosugi (Outside
Director), Katsunori Taniguchi (Outside Director and Audit and Supervisory Committee Member), Motoaki Kuniyasu (Outside Director and
Audit and Supervisory Committee Member), Takashi Himeno (President), Manabu Fujiwara (Inside Managing Director), Atsushi Ookita(Inside Director), Yasuo Sakai (Inside Director)
Compensation Committee: Noriko Kosugi (Chairperson/Outside Director), Masahiko Ootsuka (Outside Director), Shizuyo Takahashi (Outside
Director), Katsunori Taniguchi (Outside Director and Audit and Supervisory Committee Member), Motoaki Kuniyasu (Outside Director and
Audit and Supervisory Committee Member), Takashi Himeno (President), Manabu Fujiwara (Inside ManagingDirector), Hideki Takagi (Inside
Director), Toshiharu Sakai (Director and Full-time Audit and Supervisory Committee Member)(2) Committee roles and scope of authority
As requested by the Board of Directors, the Nomination Committee and the Compensation Committee deliberate on important mattersrelated to nomination of and compensation for Directors and others and report their findings to the Board.
(3) Rationale concerning the independence of committee membershipAs described under (1) above, the majority of membership of each committee consists of independent Outside Directors. Their chairpersons
are chosen from among their independent Outside Director members to ensure the independence and transparency of committee
participation and advising.
(4) Status of the activities (meeting intervals, major agenda items, attendance of individual members)
The Nomination Committee reviewed the proposed candidates for various offices, including President, Directors, Audit and Supervisory
Committee Members, and executive officers in FY2024, and reported its findings to the Board of Directors.
The Nomination Committee also deliberates on succession planning. A new plan was implemented starting in FY2023.
The Compensation Committee reviewed various matters, including individual compensation for the President and Directors and decisionmaking procedures for executive compensation and reported its findings to the Board of Directors.
Shown below is the status of meetings of the Nomination Committee and the Compensation Committee in FY2023 (FY56).
<Nomination Committee>
Number of meetings held: 6
Masahiko Ootsuka (Chairperson/Outside Director): Attended all meetings held.
Shizuyo Takahashi (Outside Director): Attended all meetings held.
Noriko Kosugi (Outside Director): Attended all meetings held.
Eiichiro Nakatani (Outside Director and Audit and Supervisory Committee Member): Attended all meetings held.
Katsunori Taniguchi (Outside Director and Audit and Supervisory Committee Member): Attended five of six meetings.
Takashi Himeno (Inside Director and President): Attended all meetings held.
Manabu Fujiwara (Inside Managing Director): Attended all meetings held.
Atsushi Ookita (Inside Director): Attended all meetings held.
Yasuo Sakai (Inside Director): Attended all meetings held.
<Compensation Committee>
Number of meetings held: 6
Noriko Kosugi (Chairperson/Outside Director): Attended all meetings held.
Masahiko Ootsuka (Outside Director): Attended all meetings held.
Shizuyo Takahashi (Outside Director): Attended all meetings held.
Eiichiro Nakatani (Outside Director and Audit and Supervisory Committee Member): Attended all meetings held.
Katsunori Taniguchi (Outside Director and Audit and Supervisory Committee Member): Attended five of six meetings.
Takashi Himeno (Inside Director and President): Attended all meetings held.
Manabu Fujiwara (Inside Managing Director): Attended all meetings held.
Hideki Takagi (Inside Director): Attended all meetings held.
Toshiharu Sakai (Director and Full-time Audit and Supervisory Committee Member): Attended all meetings held.

[Independent officers]
Number of independent officers

5

Other matters related to independent officers
While the Company has not established standards or policies concerning the independence of Outside Directors (including Audit andSupervisory Committee Members), it refers to the independence criteria for independence officers established by the Tokyo Stock Exchange
when choosing them.

[Incentives]
Status of implementation of measures related to Director
incentives

Adoption of performance-based compensation systems and stock option
systems

Supplemental explanation concerning this item
Performance-based compensation is paid and stock options are awarded based on the policies described in I-1. Basic views: Disclosure basedon the principles of the Corporate Governance Code: Principle 3.1 (iii).
<Reference>
Stock options are awarded to Directors (excluding Directors who are Audit and Supervisory Committee Members and Outside Directors) as
share-based compensation up to a maximum of 70,000,000 yen per year and a total of 1,800 options (100 shares/option). In FY2023, by aresolution passed at the 54th Regular General Meeting of Shareholders, held April 22, 2022, 95 stock options were awarded to six Directors who
are not Audit and Supervisory Committee Members.
Recipients of stock options

Inside Directors

Supplemental explanation concerning this item
Stock options were adopted as share-based compensation to replace officer retirement benefits, which were discontinued as of the end of the44th Regular General Meeting of Shareholders held April 18, 2012. This system was adopted so that Company Directors (excluding Directors
who are Audit and Supervisory Committee Members and Outside Directors) may share with shareholders the benefits and risks of fluctuations inshare price and to more clearly set forth the management responsibility for increasing corporate value.

[Director compensation]
State of disclosure of compensation for individual directors

Individual compensation not disclosed

Supplemental explanation concerning this item
Total compensation for all Directors is disclosed in the Securities Report.

Policies on decisions on actual compensation or how actual
compensation is calculatedY

Nature of the information found in disclosures of policies on decisions on actual compensation or how actual compensation is
calculated
Described in I-1. Basic views: Disclosure based on the principles of the Corporate Governance Code: Principle 3.1 (iii).

[Support structure for Outside Directors]
While no personnel are assigned to dedicated posts to assist in the duties of Outside Directors (including Directors who are Audit andSupervisory Committee Members), a structure is in place whereby the staff of sections such as the Corporate Management Group and theinternal audit section assist in the duties of Directors who are Audit and Supervisory Committee Members when so requested by such Directors.
In addition, when matters or information of great significance are brought up in deliberations by the Board of Directors or the Executive
Committee, the Company provides Outside Directors (including Directors who are Audit and Supervisory Committee Members) with materials
well in advance of such meetings of the Board of Directors or Executive Committee, thereby allowing sufficient time to review them andenhancing management oversight functions.

2. Matters related to functions such as decision-making on business execution, audits and oversight,
nomination, and compensation (overview of current corporate governance system) Updated(1) Current system
At present, the Company Board of Directors consists of 12 members in total: nine Directors who are not Audit and Supervisory Committee
Members (three of whom are Outside Directors) and three Directors who are Audit and Supervisory Committee Members (two of whom are
Outside Directors). The Board is chaired by the President. As such, Outside Directors account for at least one-third of the Board.
The Company Board of Directors is responsible for making decisions on basic management policies, matters specified under laws andregulations, and other important management topics and for overseeing business execution.
The Company has established an optional nomination and compensation committee to deliberate on compensation for directors as
described in I-1. Basic views: Disclosure based on the principles of the Corporate Governance Code: Principle 3.1 (iv) of this Report and on
nomination of candidates for Director under I-1. Basic views: Disclosure based on the principles of the Corporate Governance Code:Principle 3.1 (iii) of this Report.
In the fiscal year ended January 31, 2024, the Board of Directors met a total of 16 times. The attendance of each Director is given below.
<Directors who are not Audit and Supervisory Committee Members>
Takashi Himeno: attended 16 of 16 meetings, for a 100% attendance rate
Manabu Fujiwara: attended 16 of 16 meetings, for a 100% attendance rate
Masato Tamano: attended 16 of 16 meetings, for a 100% attendance rate
Hideki Takagi: attended 13 of 13 meetings, for a 100% attendance rate (appointed April 2023)
Atsushi Ookitai: attended 13 of 13 meetings, for a 100% attendance rate (appointed April 2023)
Yasuo Sakaii: attended 13 of 13 meetings, for a 100% attendance rate (appointed April 2023)
Masahiko Ootsuka: attended 16 of 16 meetings, for a 100% attendance rate
Shizuyo Takahashii: attended 13 of 13 meetings, for a 100% attendance rate (appointed April 2023)
Noriko Kosugii: attended 13 of 13 meetings, for a 100% attendance rate (appointed April 2023)<Directors who are Audit and Supervisory Committee Members>
Toshiharu Sakai: attended 13 of 13 meetings, for a 100% attendance rate (appointed April 2023)
Eiichiro Nakatani: attended 15 of 16 meetings, for a 93.75% attendance rate
Katsunori Taniguchi: attended 16 of 16 meetings, for a 100% attendance rate
For further deliberation on important management topics, the Executive Committee, whose membership of nine includes the President andexecutive officers, meets weekly to consider practical matters.
(2) Status of audits and other activities by the Audit and Supervisory Committee, etc.
The membership of the Audit and Supervisory Committee consists of one Director who is a full-time Audit and Supervisory Committee
Members and two Outside Directors who are Audit and Supervisory Committee Members.
The status of internal audits and account audits is as described under II-1 (iii) Status of joint efforts among the Audit and Supervisory
Committee, accounting auditor, and internal audit section of this Report.
In the fiscal year ended January 31, 2024, the Audit and Supervisory Committee met 13 times in total. The attendance of individual Directors
who are Audit and Supervisory Committee Members is given below.
Toshiharu Sakai: attended 10 of 10 meetings, for a 100% attendance rate (appointed April 2023)
Ei'ichiro Nakatani: attended 12 of 13 meetings, for a 92.31% attendance rate
Katsunori Taniguchi: attended 13 of 13 meetings, for a 100% attendance rate(3) Status of the activities of the Nomination Committee and Compensation Committee, etc.
Membership of the Nomination Committee consists of all five independent Outside Directors as well as inside Directors (four Directors who
are not Audit and Supervisory Committee Members).
Membership of the Compensation Committee consists of all five independent Outside Directors as well as inside Directors (three Directors
who are not Audit and Supervisory Committee Members and one Director who is an Audit and Supervisory Committee Member).
Attendance in meetings of each committee and other matters are as described under II. Business management organization and othercorporate governance systems affecting decision-making, business execution, and management oversight: 1. Organizational composition
and management: (4) Optional committees of this Report.
(4) Summary of terms and conditions of agreements on limitations on liability
Pursuant to Article 427, Paragraph 1 of the Companies Act and the Company Articles of Incorporation, the Company concludes agreementswith Outside Directors that limit their liability under Article 423, Paragraph 1 of the Companies Act. These agreements limit such liability to theamounts specified under laws and regulations. These limits on liability apply only to cases free of gross negligence in which the Outside
Directors perform their duties in good faith.

3. Reasons for selecting the current corporate governance system

The Company has adopted the structure of a company with an Audit and Supervisory Committee to enhance the oversight functions of the Boardof Directors and to accelerate decision-making on business execution.
The Company has also established the Nomination Committee and the Compensation Committee as optional advisory bodies to the Board of
Directors to ensure objectivity and transparency in the Board’s decision-making processes on matters concerning executive personnel andcompensation.
The above system is intended to enhance corporate governance still further.

III Status of Implementation of Measures Related to Shareholders and Other Stakeholders
1. State of initiatives designed to encourage active participation in general meetings of shareholders andfacilitate the exercise of voting rights
Supplemental explanation

Sending out notices of convocation of general meetings ofshareholders early

Notices of convocation of general meetings of shareholders are posted to
the Company website and TDNet at least 28 days before each general
meeting.
Written notice to access the notice of convocation is sent out at least 20
days before each general meeting.

Scheduling of general meetings of shareholders to avoid
peak periods

Since the Company fiscal year ends January 31, there is little likelihood thatthe general meeting of shareholders will be held during a peak period.

Exercise of voting rights by electromagnetic means

We have adopted a system of exercise of voting rights by electromagnetic
means.

Use of the Electronic Voting Platform and other initiatives
to improve the environment for exercise of voting rights byinstitutional investors

We have adopted the Electronic Voting Platform and maintain anenvironment that allows for the electronic exercise of voting rights.

Provision of English translations of convocation notices(summaries)

We post English translations of convocation notices (essentials andreference materials) to the Company website and TDNet.

2. State of Investor relations activities
Supplemental explanation

Briefing by the
representative
directly

Periodic briefings for analysts and individual investors

Briefings on financial results are held twice a year
for institutional investors, analysts, journalists, andothers. Individual interviews and small meetings arealso held. Financial results briefings are streamed
live and made available on demand to inform aneven wider audience of stakeholders of Company
matters.

Y

Posting of investor relations materials on the website

Information posted to the website includes
summaries of financial results, timely disclosurematerials on subjects other than financial results,
securities reports or quarterly reports, and materials
for and videos of financial results briefings.

Establishment of a section (person) to oversee investor
relations

The Corporate Planning Division is the section withchief responsibility for investor relations.

3. State of efforts related to respect for stakeholder positions
Supplemental explanation

Provisions on respect for the positions of stakeholders ininternal rules, etc.

The CEC Group Corporate Code of Conduct includes the following
provisions regarding customers, shareholders, trading partners, andemployees:
 We strive to earn customer satisfaction and trust by acting with due
moderation and in good faith at all times, putting the customer first at all
times.
 We supply products and services to satisfy customers based on quality,
appropriate costs, on-time delivery, and high production speed.
 By developing new technologies, ceaselessly building on our
technological strengths, and applying the best technologies, we provide
products and services that satisfy customers.
 In providing products and services, we engage in fair transactions at all
times and in support of fair, transparent, and free competition.
 We respect employee individuality and personality and foster workplaceenvironments in which each employee can demonstrate his or her
individuality and abilities to the fullest. We work to achieve a corporate
culture of enjoyable, rewarding work that supports work-life balance andwell-being for employees.
 We strive to enhance efficient management through rapid and flexible
decision-making and improve profitability. We thereby seek to earn thetrust of shareholders, trading partners, and other business partners andto contribute to sustainable Company growth and progress.

Implementation of environmental protection activities, CSR
activities, etc.

(1) Environmental protection activities
The Company publishes its environmental policy on is website. It
identifies energy and resource conservation as important priorities andsupports the COOL CHOICE initiative led by the Ministry of theEnvironment of Japan to address global warming. Other environmental
protection initiatives include power savings and comfortable clothing
options for all officers and employees.
These activities are managed under an environmental management
system that meets ISO 14001 standards. We strive to ensure their firm
establishment throughout the organization by monitoring, evaluating,and reviewing the status of activities intended to achieve ourenvironmental targets. We have begun working to earn ISO 14001
certification for these activities. In the year ended January 31, 2024, allmajor facilities attained ISO 14001 certification.
We also support the recommendations of the Task Force on ClimateRelated Financial Disclosures (TCFD) established by the Financial
Stability Board (FSB). Since climate change is one of the key
management topics, we gather and analyze data to assess thepotential impact of climate risks and opportunities on our businessactivities and will continue to enhance both the quality and quantity of
disclosures concerning governance, strategy, risk management, andother topics.
See the Company website for more information on our approach toclimate change and disclosure based on TCFD recommendations.
https://www.cec-ltd.co.jp/esg/climate_change.html(2) CSR activities
The General Affairs Division plays a central role in addressing other
CSR topics. We formulate and continually promote action plans basedon the Sustainable Development Goals (SDGs).
The specifics of these environmental protection activities and CSR
activities are published under ESG Initiatives on the Company website.
https://www.cec-ltd.co.jp/esg/governance.html

IV Matters Related to Internal Control Systems, Etc.
1. Basic outlook on internal control systems and their maintenanceThe basic policies that guide the preparation of the Company’s internal control systems are outlined below.
1

Systems for ensuring that the execution of the duties of directors of the Company and its subsidiaries (“Group” hereinafter) complies withlaws, regulations, and the articles of incorporation
1) As the individuals responsible for exemplifying adherence to the CEC Group Corporate Code of Conduct, Directors are required to act inaccordance with the standards of common decency and in full compliance with laws, regulations, and Company rules and regulations.
2) The Board of Directors must develop effective internal control systems and strive to establish and strengthen compliance systems
Groupwide.
3) The Audit and Supervisory Committee audits and investigates as necessary the status of execution of the duties of Directors based on
audit plans established by the Audit and Supervisory Committee, the Audit and Supervisory Committee Regulations, and other policies.
4) Directors who are Audit and Supervisory Committee members are allowed to attend and express opinions in meetings of the Board of
Directors, the Executive Committee, and other important meetings held by Directors in accordance with the Companies Act.

2

Systems for ensuring the retention and management of information related to the execution of the duties of directors
1) The following documents (including electromagnetic records) and related materials are retained in accordance with the Document
Control Regulations:(i) Minutes of general meetings of shareholders(ii) Minutes of Board of Directors meetings(iii) Minutes and records of the proceedings of other important meetings held by Directors(iv) Applications for approval(v) Other important documents related to the execution of duties of Directors
2) The documents enumerated above are handled in accordance with the Document Control Regulations. They are retained in ways thatmake it possible for Directors to view them promptly when so requested.

3

Rules and other systems related to management of risks of losses
1) The Executive Committee and similar bodies gather risk information and manage risks systematically to prevent and swiftly identify the
emergence of any risks. The Group maintains these risk control systems in a manner that allow swift and appropriate information control
and emergency responses in the event of an incident.

4

Systems for ensuring that the duties of directors are executed efficiently
1) The Board of Directors meets regularly and at other times as needed to make timely and appropriate decisions on important matters.
These meetings constitute the foundations that assure the effective and efficient execution of the duties of the Directors.
2) Decisions of the Board of Directors are reflected in business execution swiftly and appropriately. To strengthen oversight of their
execution, an executive officer system has been adopted to separate the business execution functions. In this way, the Group strives toimprove management efficacy.
3) When delegating the execution of important duties, the Board of Directors determines personnel assignments and the extent of authority
delegated to enable swift business execution and to maintain a reasonable separation of duties, authority rules, etc.

5

Systems for ensuring that the execution of duties of Group employees complies with laws, regulations, and the articles of incorporation
1) The CEC Group Corporate Code of Conduct has been established to clearly set forth the fundamental principles of corporate activities,
establishing and distributing employee behavioral standards to all employees to serve as the basis for everyday activities.

2) Employees who learn of any actions counter to laws, regulations, Company rules and regulations, or social norms are required to reportthem promptly to the internal whistleblowing system.
3) The internal audit section and other related sections conduct periodic internal audits of business as a whole, focusing on matters such ascompliance and the details and validity of business procedures pursuant to internal audit rules. The results of these audits are reported to
the President.
6

Systems for ensuring the propriety of Group business operations and systems related to reporting to the Company of matters related to the
execution of duties of subsidiary Directors and others
1) The CEC Group Corporate Code of Conduct has been established to ensure consistency in outlook concerning compliance, information
security, and other matters.
2) The Company manages business operations overall by assigning Company Directors responsibility for individual subsidiaries.
3) To ensure the propriety of the operations of the Group as a whole, the Company establishes rules for or provides guidance and support
for the application of Company rules to subsidiaries within the extent feasible and appropriate in light of considerations such as the scaleand structure of the subsidiary businesses.
4) The Company Board of Directors deliberates in advance on important subsidiary decisions and requests reports as needed regarding
other necessary information.

7

Matters concerning Directors and employees assigned to assist in the duties of the Company Audit and Supervisory Committee as requestedby that committee, the independence of such Directors and employees from other Directors (excluding Directors who are Audit andSupervisory Committee Members), and ensuring the efficacy of instructions to such Directors and employees
1) The Audit and Supervisory Committee is authorized to instruct the staff of the internal audit section and other sections to assist withaudits as necessary. No Directors are assigned to assist in the duties of the Audit and Supervisory Committee.
2) Those assisting in audit activities are exempt from the command and control of Directors for activities that fall within the scope of
instructions to assist in audit activities.
3) The consent of the Audit and Supervisory Committee must be obtained on matters such as transfers, personnel evaluations, anddisciplinary actions for those who assist in audit activities.

8

Systems for reporting by Group Directors, Corporate Auditors, and employees to the Company Audit and Supervisory Committee and forprotecting them from disadvantageous treatment due to such reporting
1) Group Directors, Corporate Auditors, and employees who have discovered facts that could lead to significant damage to the Group,
improprieties, or violations of laws, regulations, or the articles of incorporation must report them promptly to the Company Audit andSupervisory Committee. The Company Audit and Supervisory Committee also may demand reports from such parties as necessary.
2) No Group Director, Corporate Auditor, or employee who submits such report to the Company Audit and Supervisory Committee shall be
subject to disadvantageous treatment for having submitted such reports. All due efforts must be made to ensure that all personnel
understand this.

9

Matters concerning policies on procedures for prepayment or refunding of the costs of execution of the duties of the Company Audit andSupervisory Committee and other processing of costs or debts incurred in execution of such duties
1) When the Audit and Supervisory Committee requests measures such as prepayment of the costs of executing its duties, such costs or
debts must be swiftly processed unless they are judged not necessary for the execution of such duties.

10 Other systems to ensure that the Company Audit and Supervisory Committee is able to carry out effective audits
1) As necessary, the Audit and Supervisory Committee may interview or demand reports from Group Directors, Corporate Auditors, andemployees.
2) The Audit and Supervisory Committee engages in periodic meetings to exchange opinions with each of the following: President, audit
firm, internal audit section, other parties.
3) Meetings are held among Independent Outside Directors to exchange information between Directors who are Audit and Supervisory
Committee Members and other Outside Directors.
11 The Group’s systems for excluding antisocial forces
1) In accordance with the CEC Group Corporate Code of Conduct, we prohibit all relationships with, reject any improper demands from, andcategorically refuse to provide funds to antisocial forces and other groups that threaten the order and safety of society.
2) We strive to gather information through routine dialogue with law enforcement and other external agencies and ensure thoroughawareness within the organization through internal training and other activities, thereby maintaining the structures needed tosystematically exclude antisocial forces.
3) In addition to reviews to confirm that transaction counterparties do not qualify as antisocial forces as legally defined, we implement othersteps, including incorporating contractual provisions that enable the cancelation of contracts if counterparties are found to qualify as
antisocial forces.
12 Systems for ensuring the reliability of the Group’s financial reporting1) In accordance with the Financial Instruments and Exchange Act, we continually maintain, operate, and assess systems to assure theefficacy and propriety of internal controls related to financial reporting and to assure the reliability and propriety of financial reporting.

2. Basic outlook on exclusion of antisocial forces and maintenance of related systems
The Group Corporate Code of Conduct prohibits all relationships with and rejects and calls to others to reject improper demands from and theprovision of any funds to benefit antisocial forces.
We strive to gather information through joint efforts with law enforcement and other external agencies and ensure thorough awareness within theorganization through internal training and other activities. We confirm that transaction counterparties do not qualify as antisocial forces and are
currently proceeding to incorporate contractual provisions that enable the cancelation of contracts when counterparties are found to qualify as
antisocial forces.

V Other
1. Measures to defend against takeover bids
Measures adopted to defend against takeover bids

N/A

Supplemental explanation concerning this item–––––

2. Other matters related to corporate governance systems[Overview of timely disclosure systems]
Important management information is disclosed in a timely manner via the Tokyo Stock Exchange, the Company website, and other avenues
following discussion and decision-making by the Executive Committee and the Board of Directors. We have established Insider Trading
Prevention Regulations under which we strive to appropriately manage information concerning material facts that have yet to be made public.

[Internal control system schematic]

General Meeting of Shareholders

Appointment/
dismissal

Nomination andCompensation Committees

Appointment/dismissal

Appointment/
dismissal
ReportingConsultation/
advising

Board of Directors

Audit and Supervisory
Committee

9 Directors (excluding Audit and Supervisory
Committee Members)

3 Directors who are Audit andSupervisory Committee Members

Oversight

Appointment/
dismissal

President
Oversight

Cooperation

Accounting auditor

Cooperation

Cooperation

Oversight/auditing

Internal Audit Division

Reporting

Auditing

Executive Committee(Business execution
decisions)Auditing

Auditing

Guidance/command

Business execution sections

Group companies

[Timely disclosure system schematic]

Tokyo Stock Exchange (TSE)

Disclosure

Submission
Practical disclosure
operations

Person in charge of practical disclosure operations
Instruction
Auditing

Review and final
decisions on
disclosure

Board of Directors

Reporting

Reporting
Review andpreliminary decisions
on disclosure

ReportingExecutive Committee

Reporting
Auditing
Director in charge of corporate management

Informationcollection

Instruction

Reporting

Each business department

ReportingInstruction

Group companies

Incident/decision

Audit and Supervisory
Committee

Internal Audit
Division[Directors’ skills matrix]
Business
administration/
governance

Sales/
marketing

ICT

Masato Tamano

Hideki TakagiAtsushi OokitaYasuo Sakai

Takashi Himeno

HR/labor

Finance/accounting









Manabu Fujiwara

Masahiko Ootsuka(Outside)

Legal/
complianceShizuyo Takahashi(Outside)

Noriko Kosugi(Outside)Toshiharu Sakai

(Audit and Supervisory
Committee Member)

Katsunori Taniguchi

(Audit and Supervisory
Committee Member/Outside)

Motoaki Kuniyasu(Audit and Supervisory
Committee Member/Outside)







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